East Timor has a lower-middle-income economy.[9] About 37.4% of the country's population lives below the international poverty line – which means living on less than U.S. $1.25 per day[10] – and about 50% of the population is illiterate.[11] It continues to suffer the after-effects of a decades-long struggle for independence against Indonesian occupation, which severely damaged the country's infrastructure and killed at least 100,000 people. The country is placed 128th on the Human Development Index (HDI).

"Timor" derives from timur, the word for "east" in Indonesian and Malay, which became Timor in Portuguese and entered English as Portuguese Timor. Leste is the Portuguese word for "east", resulting in "Timor-Leste" (East-East). In Tetum the name is Timór Lorosa'e, from Lorosa'e (lit "rising sun") the word for "east" in that language.

The official names under the Constitution are República Democrática de Timor-Leste in Portuguese and Repúblika Demokrátika Timór-Leste in Tetum.

Descendants of at least three waves of migration are believed to still live in East Timor. The first were related to the principal Australoid indigenous groups of New Guinea and Australia, and arrived more than 40,000 years ago. Around 3000 BC, Austronesians migrated to Timor, and are thought to be associated with the development of agriculture on the island.[citation needed] Thirdly, Proto-Malays arrived from south China and north Indochina.[16]Before European colonialism, Timor was included in Chinese and Indian trading networks, and in the 14th century was an exporter of aromatic sandalwood, slaves, honey, and wax. It was the relative abundance of sandalwood in Timor that attracted European explorers to the island in the early 16th century.[17] During that time, European explorers reported that the island had a number of small chiefdoms or princedoms.[citation needed]

The Portuguese established outposts in Timor and Maluku. Effective European occupation of a small part of the territory began in 1769, when the city of Dili was founded and the colony of Portuguese Timor declared.[19] A definitive border between the Dutch-colonised western half of the island and the Portuguese-colonised eastern half of the island was established by the Permanent Court of Arbitration of 1914,[20] and it remains the international boundary between the successor states East Timor and Indonesia. For the Portuguese, East Timor remained little more than a neglected trading post until the late nineteenth century, with minimal investment in infrastructure, health, and education. Sandalwood remained the main export crop with coffee exports becoming significant in the mid-nineteenth century. As was often the case, Portuguese rule was generally neglectful but exploitative where it existed.[21]

At the beginning of the twentieth century, a faltering home economy prompted the Portuguese to extract greater wealth from its colonies, which was met with East Timorese resistance.[21] During World War II, the Japanese occupied Dili, and the mountainous interior became the scene of a guerrilla campaign, known as the Battle of Timor. Waged by Allied forces and East Timorese volunteers against the Japanese, the struggle resulted in the deaths of between 40,000 and 70,000 East Timorese.[22] The Japanese eventually drove the last of the Australian and Allied forces out. However, following the end of World War II and Japanese surrender, Portuguese control was reinstated.

Following the 1974 Portuguese revolution, Portugal effectively abandoned its colony on Timor and civil war between East Timorese political parties broke out in 1975.

The Revolutionary Front for an Independent East Timor (Frente Revolucionária de Timor-Leste Independente, Fretilin) resisted a Timorese Democratic Union (União Democrática Timorense, UDT) coup attempt,[23] and unilaterally declared independence on November 28, 1975. Fearing a communist state within the Indonesian archipelago, the Indonesian military, with western support, launched an invasion of East Timor in December 1975. Indonesia declared East Timor its 27th province on 17 July 1976 (Timor Timur).[24] The UN Security Council opposed the invasion and the territory's nominal status in the UN remained as "non-self-governing territory under Portuguese administration".[25]

The following year, Gusmão declined another presidential term and in the build-up to the April 2007 presidential elections there were renewed outbreaks of violence. José Ramos-Horta was elected President in the May 2007 election.[34] Ramos-Horta was critically injured in an attempted assassination in February 2008. Prime Minister Gusmão also faced gunfire separately but escaped unharmed. Australian reinforcements were immediately sent to help keep order.[35] In 2006, the United Nations sent in security forces to restore order when unrest and factional fighting forced 15 percent of the population (155,000 people) to flee their homes. In March 2011, the UN handed-off operational control of the police force to the East Timor authorities. The United Nations ended its peacekeeping mission on December 31, 2012.[36]

The unicameral East Timorese parliament is the National Parliament or Parlamento Nacional, whose members are elected by popular vote to a five-year term. The number of seats can vary from a minimum of fifty-two to a maximum of sixty-five. The East Timorese constitution was modeled on that of Portugal. The country is still in the process of building its administration and governmental institutions. Government departments include the Polícia Nacional de Timor-Leste (police), East Timor Ministry for State and Internal Administration, Civil Aviation Division of Timor-Leste, and Immigration Department of Timor-Leste.[citation needed]

The Timor Leste Defence Force (Forças de Defesa de Timor-Leste, F-FDTL) is the military body responsible for the defence of East Timor. The F-FDTL was established in February 2001 and comprised two small infantry battalions, a small naval component, and several supporting units.

The F-FDTL's primary role is to protect East Timor from external threats. It also has an internal security role, which overlaps with that of the National Police of East Timor (Polícia Nacional de Timor-Leste, PNTL). This overlap has led to tensions between the services, which have been exacerbated by poor morale and lack of discipline within the F-FDTL.

The F-FDTL's problems came to a head in 2006 when almost half the force was dismissed following protests over discrimination and poor conditions. The dismissal contributed to a general collapse of both the F-FDTL and PNTL in May and forced the government to request foreign peacekeepers to restore security. The F-FDTL is being rebuilt with foreign assistance and has drawn up a long-term force development plan.

Much of the country is mountainous, and its highest is Tatamailau (also known as Mount Ramelau) at 2,963 metres (9,721 ft). The climate is tropical and generally hot and humid. It is characterised by distinct rainy and dry seasons. The capital, largest city, and main port is Dili, and the second-largest city is the eastern town of Baucau. East Timor lies between latitudes 8° and 10°S, and longitudes 124° and 128°E.

The easternmost area of East Timor consists of the Paitchau Range and the Lake Ira Lalaro area, which contains the county's first conservation area, the Nino Konis Santana National Park.[40] It contains the last remaining tropical dry forested area within the country. It hosts a number of unique plant and animal species and is sparsely populated.[41] The northern coast is characterised by a number of coral reef systems that have been determined to be at risk.[42]

East Timor has a market economy that used to depend upon exports of a few commodities such as coffee, marble, oil, and sandalwood.[43] East Timor's economy grew by about 10% in 2011 and at a similar rate in 2012.[44]

Timor now has revenue from offshore oil and gas reserves, but little of it has gone to develop villages, which still rely on subsistence farming.[45] Nearly half the population lives in extreme poverty.[45]

The Timor-Leste Petroleum Fund was established in 2005, and by 2011 it had reached a worth of US$8.7 billion.[46] East Timor is labelled by the International Monetary Fund as the "most oil-dependent economy in the world".[47] The Petroleum Fund pays for nearly all of the government's annual budget, which has increased from $70 million in 2004 to $1.3 billion in 2011, with a $1.8 billion proposal for 2012.[46]

The economy is dependent on government spending and, to a lesser extent, assistance from international donors.[48] Private sector development has lagged due to human capital shortages, infrastructure weakness, an incomplete legal system, and an inefficient regulatory environment.[48] After petroleum, the second largest export is coffee, which generates about $10 million a year.[48]Starbucks is a major purchaser of East Timorese coffee.[49]

9,000 tonnes of coffee, 108 tonnes of cinnamon and 161 tonnes of cocoa were harvested in 2012 making the country the 40th ranked producer of coffee, the 6th ranked producer of cinnamon and the 50th ranked producer of cocoa worldwide.[50]

According to data gathered in the 2010 census, 87.7% of urban (321,043 people) and 18.9% of rural (821,459 people)households have electricity, for an overall average of 38.2%.[51]

The agriculture sector employs 80% of the active population.[52] In 2009, about 67,000 households grew coffee in East Timor, with a large proportion being poor.[52] Currently, the gross margins are about $120 per hectare, with returns per labor-day of about $3.70.[52] There are 11,000 household growing mungbeans as of 2009, most of them subsistence farmers.[52]

The country was ranked 169th overall and last in the East Asia and Pacific region by the Doing Business 2013 report by the World Bank. The country fared particularly poorly in the 'registering property', 'enforcing contracts' and 'resolving insolvency' categories, ranking last worldwide in all three.[53]

In regards to telecommunications infrastructure, Timor-Leste is the 2nd to last ranked Asian country in the World Economic Forum's Network Readiness Index (NRI) with only Myanmar falling behind it in southeast Asia. NRI is an indicator for determining the development level of a country’s information and communication technologies. Timor-Leste ranked number 141 overall in the 2014 NRI ranking, down from 134 in 2013.[54]

The Portuguese colonial administration granted concessions to Oceanic Exploration Corporation to develop petroleum and natural gas deposits in the waters southeast of Timor. However, this was curtailed by the Indonesian invasion in 1976.[citation needed] The resources were divided between Indonesia and Australia with the Timor Gap Treaty in 1989.[55] East Timor inherited no permanent maritime boundaries when it attained independence.[citation needed] A provisional agreement (the Timor Sea Treaty, signed when East Timor became independent on 20 May 2002) defined a Joint Petroleum Development Area (JPDA) and awarded 90% of revenues from existing projects in that area to East Timor and 10% to Australia.[56] An agreement in 2005 between the governments of East Timor and Australia mandated that both countries put aside their dispute over maritime boundaries and that East Timor would receive 50% of the revenues from the resource exploitation in the area (estimated at A$26 billion, or about US$20 billion over the lifetime of the project)[57] from the Greater Sunrise development.[58] In 2013, East Timor launched a case at the Permanent Court of Arbitration in The Hague to pull out of a gas treaty that it had signed with Australia, accusing the Australian Secret Intelligence Service (ASIS) of bugging the East Timorese cabinet room in Dili in 2004.[59]

The population of East Timor is about 1,143,667.[6] The population is especially concentrated in the area around Dili.[citation needed]

The word Maubere,[62] formerly used by the Portuguese to refer to native East Timorese and often employed as synonymous with the illiterate and uneducated, was adopted by FReTiLIn as a term of pride.[63] They consist of a number of distinct ethnic groups, most of whom are of mixed Malayo-Polynesian and Melanesian/Papuan descent.[citation needed] The largest Malayo-Polynesian ethnic groups are the Tetum[64] (100,000), primarily in the north coast and around Dili; the Mambai (80,000), in the central mountains; the Tukudede (63,170), in the area around Maubara and Liquiçá; the Galoli (50,000), between the tribes of Mambae and Makasae; the Kemak (50,000) in north-central Timor island; and the Baikeno (20,000), in the area around Pante Macassar.[citation needed]

The main tribes of predominantly Papuan origin include the Bunak (50,000), in the central interior of Timor island; the Fataluku (30,000), at the eastern tip of the island near Lospalos; and the Makasae, toward the eastern end of the island.[citation needed] As a result of interracial marriage which was common during the Portuguese era, there is a population of people of mixed East Timorese and Portuguese origin, known in Portuguese as mestiços. There is a small Chinese minority, most of whom are Hakka. Many Chinese left in the mid-1970s.[65]

Under Indonesian rule, the use of Portuguese was banned and only Indonesian was allowed to be used in government offices, schools and public business.[68] During the Indonesian occupation, Tetum and Portuguese were important unifying elements for the East Timorese people in opposing Javanese culture.[69] Portuguese was adopted as one of the two official languages upon independence in 2002 for this reason and as a link to Lusophone nations in other parts of the world. It is now being taught and promoted with the help of Brazil, Portugal, and the Community of Portuguese Language Countries.[70]

Indonesian and English are defined as working languages under the Constitution in the Final and Transitional Provisions, without setting a final date. Aside from Tetum, Ethnologue lists the following indigenous languages: Adabe, Baikeno, Bunak, Fataluku, Galoli, Habun, Idaté, Kairui-Midiki, Kemak, Lakalei, Makasae, Makuv'a, Mambae, Nauete, Tukudede, and Waima'a.[71] It is estimated that English is understood by 31.4% of the population. 35% speak, read, and write Portuguese as of 2012, which is up significantly from less than 5% in the 2006 UN Development Report.[72][73]

East Timor's adult literacy rate in 2010 was 58.3 per cent, up from just 37.6% in 2001.[76] Illiteracy is higher among women.In schools it is believed that corporal punishment still occurs in some situations and attendance is so important teachers would make way to find out why you aren't in school with punishments intended if reasons aren't valid. [77] Illiteracy was at 95 per cent at the end of Portuguese rule.[78] In 2006, 10% to 30% of primary-school age children did not attend school.[79]

Since independence, both Indonesian and Tetum have lost ground as mediums of instruction, while Portuguese has increased: in 2001 only 8.4% of primary school and 6.8% of secondary school students attended a Portuguese-medium school; by 2005 this had increased to 81.6% for primary and 46.3% for secondary schools.[81] Indonesian formerly played a considerable role in education, being used by 73.7% of all secondary school students as a medium of instruction, but by 2005 it was used by most schools only in Baucau, Manatuto, as well as the capital district.[81]

Life expectancy at birth was at 60.7 in 2007.[77] The fertility rate is at six births per woman.[77] Healthy life expectancy at birth was at 55 years in 2007.[77] Government expenditure on health was at US$150 (PPP) per person in 2006.[77] There were two hospitals and 14 village healthcare facilities in 1974. By 1994, there were 11 hospitals and 330 healthcare centres.[80]

The 2010 maternal mortality rate per 100,000 births for East Timor is 370. This is compared with 928.6 in 2008 and 1016.3 in 1990. The under-5 mortality rate per 1,000 births is 60 and the neonatal mortality rate per 1,000 live births is 27.[82] The number of midwives per 1,000 live births is 8 and the lifetime risk of death for pregnant women is 1 in 44.[83]

The country has one of the highest smoking rates in the world, with 33% of the population, including 61% of men, smoking daily.[84]

By 2015, due to a Cuban–East Timorese training programme initiated in 2003, East Timor will have more doctors per capita than any other country in southeast Asia.[85]

According to the Global Hunger Index of 2013, East Timor has an GHI indicator value of 29.6 indicating that the nation has an 'Alarming Hunger Situation' earning the nation the distinction of being the hungriest country in the entire continent of Asia and the 4th hungriest nation in the world.[86]

In 2007, a bad harvest led to deaths in several parts of East Timor. By November, eleven subdistricts still needed food supplied by international aid.[87]

The number of churches has grown from 100 in 1974 to over 800 in 1994,[80] with Church membership having grown considerably under Indonesian rule as Pancasila, Indonesia's state ideology, requires all citizens to believe in one God and does not recognise traditional beliefs. In rural areas, Catholicism is practised along with local traditions.[89]

The culture of East Timor reflects numerous influences, including Portuguese, Roman Catholic and Indonesian, on Timor's indigenousAustronesian and Melanesian cultures. East Timorese culture is heavily influenced by Austronesian legends. For example, East Timorese creation myth has it that an aging crocodile transformed into the island of Timor as part of a debt repayment to a young boy who had helped the crocodile when it was sick.[92] As a result, the island is shaped like a crocodile and the boy's descendants are the native East Timorese who inhabit it. The phrase "leaving the crocodile" refers to the pained exile of East Timorese from their island.

Architecturally, Portuguese-style buildings can be found, along with the traditional totem houses of the eastern region. These are known as uma lulik ("sacred houses") in Tetum and lee teinu ("legged houses") in Fataluku.[citation needed] Craftsmanship and the weaving of traditional scarves (tais) is also widespread.[citation needed]

An extensive collection of Timorese audiovisual material is held at the National Film and Sound Archive of Australia. These holdings have been identified in a document titled The NFSA Timor-Leste Collection Profile, which features catalogue entries and essays for a total of 795 NFSA-held moving image, recorded sound and documentation works that have captured the history and culture of East Timor since the early 20th century.[93] The NFSA is working with the East Timor government to ensure that all of this material can be used and accessed by the people of that country.[94] In 2013 the first East Timorese feature film, Beatriz's War, was released.[95]

The cuisine of East Timor consists of regional popular foods such as pork, fish, basil, tamarind, legumes, corn, rice, root vegetables, and tropical fruit. East Timorese cuisine has influences from Southeast Asian foods and from Portuguese dishes from its colonisation by Portugal. Flavours and ingredients from other former Portuguese colonies can be found due to the centuries-old Portuguese presence on the island.